Revealing the complexity of reducing GHG emissions in Mexico

Abstract

Reducing GHG emissions has become a widely publicized topic to halt future effects of global warming. In an effort to accelerate the energy transition a group of policy-maker from McKinsey developed a tool named marginal abatement cost curve (MACC) capable of illustrating the relationship between the cost-effectiveness of different abatement options and the total amount of GHG abated (Bockel et al, 2011). Even though the MACC has become popular for government reports and environmental analysis of abatement options through their abatement cost it lacks to analyze the options beyond the financial perspective. In 2016, Chappin published the introduction of the Y-factor method with the aim of solving the why factors that were hampering the pursual of implementing the abatement options. The method relies on the use of grading each abatement option in a scale of 0 to 2 through 12 socio-technical factors that are divided into four categories: multi-actor complexities, physical embeddedness, behavior and the cost & financing. This new method is a more robust approach than the MACC and it helps in providing new insights across different categories. The Y-factor is a relatively new method that has been furtherly assessed by Arensman (2018), Cheung (2018), and Soana (2018). This master thesis follows in the method of the Y-factor and goes a step beyond in proving its reliability when applied to a case-study, in this case applying the Y-factor for Mexico. The main research question is What emission abatement curve can capture the complexity of reducing GHG emissions in Mexico? For the construction of the emission abatement curve this research focuses on 20 abatement options that are relevant for the country. These options were selected through a process to provide diversity in the sector and reflect the reality of the biggest GHG emissions contributors of the country (energy creation, transport sector). Through a preliminary scoring based on literature review including government reports, scientific and news articles a preliminary Y-curve was constructed. The validation of the emission abatement curve was provided by contacting different experts in the country. This validation relied on interviews made to provide insights of the current situation of Mexico further understand what is hampering the implementation of the abatement options. To remove subjectivity for the validation each of the abatement option was graded by 2 or 3 experts’ interviews reducing personal bias and increasing result accuracy. The validated Y-curve results had interesting insights when comparing to the initial MACC developed by the US government for the low emission development program in Mexico and presented by Rebolledo et al (2016). The energy sector had the highest scoring abatement options on average which included renewable options such as Geothermal, Wind-Energy, Small Hydroelectric while also including fossil-based options that have become a priority for the new government administration Coal CCS for new plants. From all the options the highest ranked option according to the Y-score was the Coal CCS retrofit with a score of 22 out of 24. This means that this is the least convenient 6 option to be pursued according to the grading across the four categories. It was also interesting to note how the transport sector with options such as modal shift freight transport, transport policy changes, hybrid and electric vehicles, among others conform a highly diverse group each with different goals and widely different factors that obstruct its pursual. A key area is how the transport sector is dependent on a lot of different actors for any structural change or policy implementation meaning that these options are some of the most difficult to follow specially in the cities. Results of the Forestry & Agriculture cluster can be misleading if only the McKinsey data is available given the peculiarities of how the plot areas of land are owned in the country making it a unique situation that is hard to conceive in different countries. A general link between Mexico’s current affairs and the abatement options selected are explained to provide valuable information on the country and possible pitfalls when dealing with similarities in other countries. At the end of the report a recapitulation of the process and the main steps of the thesis are provided, as well as, concluding remarks for each chapter are mentioned to highlight the most important aspects of them. Valuable suggestions given by the interviewees on how to improve the Y-factor method have been highlighted, as well as the limitations of the study and how it can be improved. The societal and academic relevance of the project, as well as the limitations of the study are addressed and given an opinion of the added value of using the Y-factor for future research purposes is given. Concluding, the Y-factor approach adds value to decision makers and serves its main purpose of understanding the factors that hamper the abatement option implementation while also helps in unravel the complexity associated with such abatement options to a better overall understanding.